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Research Essay

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2019-03-04
Is the Torrens title system
still the most effective way
to deal with real property
interest?
Research essay on the Torrens title system in
Australia
Kajsa Stavmo
REAL ESTATE PROPERTY RIGHTS
1
Innehållsförteckning
1.
INTRODUCTION .................................................................................................................... 3
1.1
PURPOSE AND RESEARCH QUESTIONS .............................................................................................. 3
1.2
METHOD.................................................................................................................................... 3
1.3
BACKGROUND............................................................................................................................. 3
2
RESEARCH ............................................................................................................................ 5
2.1
NATIVE TITLE .............................................................................................................................. 5
2.2
INDEFEASIBILITY .......................................................................................................................... 5
2.3
THE TORRENS SYSTEM .................................................................................................................. 6
2.4
LANTMÄTERIET ........................................................................................................................... 6
3
ANALYSIS ............................................................................................................................. 8
3.1
INDEFEASIBILITY .......................................................................................................................... 8
3.2
UNREGISTERED INTERESTS ............................................................................................................ 8
3.3
THE SYSTEMS COMPARED.............................................................................................................. 9
4
CONCLUSION...................................................................................................................... 10
5
REFERENCES ....................................................................................................................... 11
Page 2
Summary
Assignment title: Is the Torrens title system still the most effective way to deal with real
property interests?
Author: Kajsa Stavmo
Student ID: 13607465
Lecturer: Scharlene Naidu
Subject: Real Estate Property Rights
Subject code: SSUD71-106
1. Introduction
1.1 Purpose and research questions
The purpose of this essay is to seek out and analyse if the Torrens title system still is the most
effective way to deal with real property interests. With this in mind, two research questions
have been put forward.
•
•
What are the strengths and weaknesses of the Torrens title system?
Does it live up to its aim to protect all interests in land?
1.2 Method
The essay has been carried out with two main articles in mind: Professor Rosalind
Croucher’s, '150 years of Torrens — Too much, too little, too soon, too late?' and Dr Paul
White’s 'It still doesn’t seem to register,. Is the Torrens system for real property dealings
effective 150 years after its enactment in Australia? ' In addition to this further information
have been researched to identify the efficiency of the Torrens System in comparison to other
equivalent systems used.
1.3 Background
A little over 150 years have passed since Sir Robert Richard Torrens proposed a new way of
land registrations in 1858 to better protect the proprietor’s indefeasibility of title. The Torrens
system reformed the way real property was dealt with and provided a unique structure that was
revolutionary in many parts of the world at the time (Croucher 2009). 150 years on, questions
are raised on whether the Torrens system still is as efficiently waterproof required to be serving
the purpose of accommodating every interest in land necessary. With wast changes in both
society and technology since the structure first originated, White (2008) argue it is fair to
question the reliability, simplicity and suitability of the setup. Information collected from
Page 3
Australian Bureau of Statistics (2017) show that just under 70% of Australian households own
their home today. The main questions of the value of land are undoubtedly concerning land
ownership and/or title of land. Ambiguity of ownership of land may obstruct economic growth
as land law and the legitimacy of land title are some of the main points on which national
prosperity is built upon (Griggs 2016). Griggs (2016) further points out that uncertainty in land
ownership may affect investor determination in the property market and increase risk
throughout transaction procedure which might lessen backing from the mortgagee segment for
property investment.
Although indefeasibility and protection of all interests relating to property is the main purpose
of the Torrens system, White (2008) dispute whether this is really the case, particularly in
regards to unregistered interests along with the exceptions (mainly fraud) to indefeasibility
currently standing. Croucher (2009) discusses the development of the Real Property Act and
the Torrens System over the years and whether necessary changes have been made to keep the
system entire and consistent. There have been significant cases over the years defining
Australian land law like the Mabo v. the State of Queensland 1992. This underlined the fact that
there are more than one set of rights and interests in land but furthermore that these rights are
not registered on title causing disputes still today (Wensing 1999). As we live in a more
connected society the ability to learn from other nations in order to quicker evolve is invaluable.
When it comes to title system and the discussion on the efficiency of the Torrens system it is
therefore also useful to look at other ways of dealing with real property interest (Griggs 2001).
In view of the above, discussion follows on whether the Torrens system is acting at its fullest
capacity protecting all rightful interest in land, as well as distinguish the strengths and
weaknesses of the structure.
Page 4
2 Research
2.1 Native title
Barry et al. (1995) describe the Torrens system to be built up with a most reliable structure
containing the indefeasibility of title, verification of being registered along with the guarantee
of the State. When buying a property, a Certificate of Title is received as a paper copy of the
online registry. If the proprietor has a mortgage this will be included on the title along with
other interests regarding the property or land such as registered leases, caveats, easements,
covenants and encumbrances (Duke 2014). There are however further interests in land that are
not registered on the title. One example is the different types of native title claims existing in
Australia. ’Native Title’ is the name given to traditional land and rivers that rightfully belongs
to Aboriginal people bestowing to their law and customs. The law of the Commonwealth Native
Title Act 1993 regulates how the rights should be acknowledged and protected (NSWLRS
2018). Unregistered rights can exist from claims made by a group of native people declaring
they hold interest over land in accordance with their traditional laws and rituals (NNTT 2018).
The claims are made through application to the High Court of Australia and if successful, the
interests are then recognised by the Common Law of Australia and a Native Title Determination
is created (NSW gov 2018).
Native title is normally referred to as a ‘bundle of rights’ meaning a selection of rights in land.
Examples of such rights may include right to perform ceremonies, hunt and camp (Cawthorn
2018). There are two types of rights recognised by the law. Non-exclusive possession: where
the native title co-exists together with additional non-Indigenous land rights like rural leases.
This gives the right of accessing the land but not to control it. The other case of native land is
referred to as exclusive possession, meaning complete possession of land with the right of full
exclusion of others. (Cawthorn 2018). However, Cromb (2017) states that native title is not
certain as it can be extinguished by a freehold title and the majority of leases over the same
land. Native title does not appear on registered titles and to find out if there has been determined
that native title exists over an area a separate search in the native title search has to be conducted
(NNTT 2018).
2.2 Indefeasibility
The main purpose of the Torrens system is to provide the proprietor with full protection and
make them conclusive. When registration is complete and the owner’s name is registered in the
Torrens Title register, the proprietor is the rightful owner to the exclusion of all others. This
simple premise that the Torrens system is based upon is named indefeasibility which is obtained
by ‘title of registration’ (Croucher 2009). One important exception to indefeasibility is in the
case of fraud and a registered interest can be defeasible and made void as a result of a registered
forged instrument. Hamilton (2013) states that there are different ways in which indefeasibility
can be used in the case of conflicting interests, and sometimes fraud, and the law protects these
interests differently depending on each case. Hamilton (2013) further explains the different
extensions of indefeasibility as Deferred indefeasibility, where a title has been obtained and
registered in good faith from a registered proprietor that might themselves have been exposed
to fraud. There are now two registered proprietors, the original owner and the new owner with
deferred indefeasibility, the defeasibility is ‘deferred’ until registration without fraud occurs
from the next buyer. Immediate indefeasibility is where good title is granted the first buyer that
was innocent to fraud as indefeasible proprietor although the transfer document was forged,
provided the new proprietor is bona fide (have acted in good faith) (Hamilton 2013).
Page 5
The Land Title Act (1994) also set out other exceptions to indefeasibility, the main being:
impersonam where the proprietor still is liable to claims made against him/her, leases shorter
than three years, omitted easements and adverse possession where a person can make a claim
in property on the basis of continuous possession.
2.3 The Torrens system
The Land Title Act 1994, sites that its main purpose is to reform the law about the registration of
freehold land and interest in freehold land and in particular:
1. ‘To define the rights of persons with an interest in registered freehold land; and
2. To continue and improve the system for registering title to and transferring interests in freehold
land; and
3. To define the functions and powers of the registrar of titles; and
4. To assist the keeping of the registers in the land registry, particularly by authorising the use of
information technology.’
There are three occasions upon which someone who has obtained a title can register this in the
Torrens system:
•
•
•
the Crown allocate an estate which can be registered
registration of Crown land
moving title from a deed registration system to the Torrens system.
Changes to the Register follows when a proprietor lodges and registers a dealing which proves
altercations, such as transfer of ownership (LRS 2018). White (2009) underlines the fact that
the system is built upon ‘title by registration’ and not ‘registration of title’. This means that a
person must have their interest in land registered before having a recognised title and the legal
rights the Torrens system provides. Today over 98% of the Torrens Register is managed and
stored electronically with a mere 2% still existing in paper form. Online services provide the
possibility for remote lodgement for the proprietor and all information about the title is open to
the public, accessible through a title search online (LRS 2018).
Although the majority of ownership is dealt with through the Torrens system, there are other
forms of dealing with land in Australia. General Law is often referred to as the ‘old system’
which was acting before the Torrens system came in place and was subsequently dealt with
under the English law system. Strata Title is a form of ownership constructed for apartments
which are a part of multi-level blocks or subdivisions with communal areas. Native title
included, these are the most common ways of dealing with property (ISCM 2018).
2.4 Lantmäteriet
As one of the oldest register systems in the world when it comes to documenting ownership of
real property, Lantmäteriet is the Swedish equivalent to the Torrens system first introduced in
1628. Lantmäteriet acts under the Swedish Government and has three main divisions:
-
Cadastral service division: responsible for the division and new land boundaries
Land registration division: accountable for registration of titles, mortgages and leasehold rights
Geo-data division: in charge of gathering and updating geographical information
Page 6
The system has the same foundation as the Torrens system in the way that the title has to be
registered before the owner is regarded as the lawful owner. In case of fraud, the rightful owner
has to make an appeal in court in order to prove his/her rightful claim. The lawful owner can
never lose their title even if the new purchaser acted in bona fide and the original owner will
always have a better claim in the event fraud (Lantmateriet 2018). To further prevent deception
when registering titles, Lantmäteriet have introduced a digital service that sends a message to
the lawful owner for every change regarding the property. For example, a copy of a lodged
application to register a new title will be sent to the current owner via the digital service to make
the registered owner aware of the action. Since this precaution was introduced there have been
no known cases of fraud resulting in an economic gain for the forger or loss for the proprietor
(Lantmateriet 2018).
The concept of native title exists in Sweden who have the indigenous people ‘Sami’. The Sami
people have certain claims to land mainly regarding the right to breed reindeer but also to hunt
and perform ceremonies. The right is legislated under Common Law and is a cross between an
easement and profits a prendre. The native title and the individual rights given to indigenous
groups are included on title along with other easements, profit a prendre and covenants
(Engstrom & Hallnor 2017).
Essential information that is noted on the title to a property in Sweden includes but is not limited
to: owner information, easements, profit a prendre, caveats and mortgages. If there is a lease
linked to a property this is not registered on title as it does not run with the property as such but
with the owner (Lantmateriet 2018). If an owner wishes to terminate a contract prior to the
agreed date, this will be a breach of contract and the owner will be liable (Jonshult 2013).
Kjellstrom (2017) explains that the future of Lantmäteriet involves additional changes to
improve the title registration system with integrity, efficiency and indefeasibility in focus.
Example of these changes are:
•
•
•
•
•
Digital matters of registration with automatically decisions and registrations
E-contracts of real property sale
No mortgage certificates in paper form
Digital Archives
No information about properties via phone calls.
Page 7
3 Analysis
3.1 Indefeasibility
In regards to the questions following the overall discussion of the Torrens capacity and
efficiency to deal with title interests, strengths and weaknesses with the system will now be
argued alongside the aim to protect all interest in land.
White (2009) maintain that the two essential parts of the Torrens system is that the property of
a registered owner is paramount and that the title acts as conclusive evidence of the proprietor’s
lawful rights following registration of title. One of the aspects aiming to provide the owner with
conclusive rights is the concept of indefeasibility. Croucher (2009) agree with White saying
indefeasibility is an essential aspect of the Torrens system but question how indefeasible it
really is. Hamilton’s (2013) explanation of the different terms of indefeasibility as immediate
and deferred may have the intent to protect the rightful interest but both White and Croucher
acknowledge the flaws in the term. Uncertainty arises in which interest should be better
protected, particularly in the case of fraud and Croacher (2009) points out the unfairness in
many cases where the victims of forgery have lost their title due to their right being overreached.
White (2008) recognise that the cases involving fraud exceptions to indefeasibility undoubtedly
are hard to resolve but points out that the issue lies within the term of exceptions to the rule
rather than the Torrens system itself. In regards to fraud Croacher (2009) brings up the
Assurance Fund where the aim is to make compensation available directly through the fund in
event of fraud instead of having to sue the wrongdoer first. This is meant to be of helpful
assistance in some of the complicated cases of exception to indefeasibility.
3.2 Unregistered interests
Thought the Torrens system is built to give the proprietor full legal right to the property there
are often occasions where other interests than the ones stated on the title have to be considered.
There are also times where unregistered interests may cause issues unaware to both the owner
of the property and the holder of an unregistered interest (White 2009). The author makes a
point that jurisdictional intervention in many cases can help clear up these issues and some
matters might even be solved by lodging a caveat. On the other hand, it is further discussed that
the unawareness of a holder of an unregistered interest may lead to failure to lodge a caveat
protecting their interest and in so losing the interest if a bona fide transfer becomes registered.
ISCM (2018) states the best way of protecting one’s interest is to have it registered on title to
avoid any uncertainty. However, with the native claim, it is not possible to have their interest
registered on title today. Coracher (2009) raises the point of competition to the register when a
dispute of unregistered interest arises. The author questions whether the decision of who is right
should be based on the premises of conveyancing practice or the fundamentals of the Torrens
title. White (2009) uphold the idea that the Torrens system is limited when looking at the
recorded interest on title and points out many cases to prove its lack of efficiency in dealing
with these situations. He moreover states that the best adequacy of the system lies in the
assortment of the register as a management tool of land, ownership and boundaries rather than
a complete register of interest in land.
Page 8
3.3 The systems compared
In order to get input from another structure equivalent to the Torrens system, information on
the Swedish Lantmäteriet have been stated above. With this in mind some of the key points
White and Croucher pointed out in their articles will now be addressed.
The authors both draw attention to the cracks in the Torrens system, one of them being the
concept of indefeasibility. Croucher (2009) reviews Torrens’s original thought of
indefeasibility and underline that the principal idea is good but questions the many loopholes
to the structure evolved over the years. Difficulties arise on whoes interest should be put first
in complex situations. The Swedish system has drawn a line regarding lawful ownership
making it close to impossible to lose your title in case of fraud as long as you make a claim in
the case of fraud. The first owner will always be considered the legitimate proprietor and if an
unaware buyer is the victim of fraud this person might be compensated but he/she will never
possess a better claim to the property (Lantmateriet 2018).
In regards to dealing with native title, NNTT (2018) writes that native claims aren’t registered
on the title but has to be searched for in a separate system in order to gain knowledge if such a
claim exists. Similar rights exist for Australian and Swedish indigenous people under which
claim to land is possible but how the rights are dealt with differs. The Swedish legislation states
that indigenous claims proven right in a lawful process, should be dealt with like any other
matter regarding land and in so be stated on the title (Engstrom & Hallnor 2017).
Unregistered interests have been proven to cause issues as new owners often are unaware of
these matters. One example is the short-term leases under three years that doesn’t have to be
registered but are still valid (Croucher 2009). In Sweden, there is no such thing as a lease that
runs with the property in the event of a change in ownership. If there is a lease linked to a
property and the proprietor sells the property during that time this would be considered a breach
of contract and he/she would be liable. If the owner wishes to sell a property whilst under a
lease contract, he/she would have to come to an agreement either with the new buyer putting
into the contract that the lease is to be taken over. Another option would be an agreement to
terminate the contract in advance and to then compensate the leaseholder (Jonshult 2013).
Page 9
4 Conclusion
The purpose of this essay has been to research and discuss if the Torrens system still is the most
effective way of dealing with properties. In doing so my questions following the overall
discussion were to examine the advantages and disadvantages with the system as well as look
into if it truly protects all and every interest in land.
After the two articles from White and Croucher along with my own research, I have found that
one of the advantages of the system and one of the main reasons for Torrens inventing the
system, is the strong aim to protect the lawful owner in creating indefeasibility. It is a powerful
term with a straight forward intent, however in saying so I also find it to be one of the major
disadvantages in the way it has evolved over the years. The term itself is solid but the way it is
being used when several parties are involved claiming different rights creates uncertainty.
Whose interest should really be protected? On the other hand, I agree with White in his opinion
that too much responsibility is laid upon the system to serve every interest just, instead of
looking at its entity as an instrument to manage land as a finite resource. It has the advantage
of being a structured and transparent system easily accessed for the public which is important
in the digital society of today.
A trend that I picked up from the gathered material and cases referred to in the articles is the
importance of reliability. Everyone wants to be able to rely on the system to serve their own
interest but it is difficult to see that possible if not every interest is stated on the title. I find it
contradictory that the system, on one hand, trying to protect every innocent interest in the event
of fraud but on the other doesn’t even present native claims on the title. It doesn’t seem to live
up to protecting every interest in excluding such an important aspect, nor is it efficient to deal
with property where you can’t rely on that all essential information is shown on the title.
The many cases of fraud and the vast extension of the exceptions to indefeasibility show that
the purpose of the term is undermined. I believe that in order to strengthen the system the terms
should be simplified and the position of an indefeasible proprietor clarified.
Croucher (2009) implies that the system has to be rock solid in order to have the confidence of
the public and I agree. The way the Torrens system is used today indicates that it is ‘rock solid’
when actually a lot of responsibility lays on the purchaser and anyone dealing with property to
make out what rules and condition apply. I believe it would be useful to look at how other
countries deal with real property in order to make out improvements that would fit Australia.
One improvement being stating native rights on the title and another, looking at the Swedish
digitalisation used for the system. The answer is never black or white and you can always argue
both sides but in order to better the system either change have to be done to keep up with today’s
society or the perception of the system has to be modified to match reality.
Page 10
5 References
ABS, 2017, ’Trends in home ownership in Australia’, ABS, viewed 19 February 2019,
< http://www.abs.gov.au/ausstats/[email protected]/Lookup/by%20Subject/4130.0~201314~Main%20Features~Introduction~2>.
Barry et al. 1995, ‘Is the Torrens system suitable for the 21th Century?’, Proceedinas of 1995 New
Zealand - Australia Cadastral Conference, viewed 17 February 2019,
<http://www.csdila.unimelb.edu.au/publication/misc/anthology/article/artic1.htm>.
Cawthorn, M 2018, ‘Native title, rights and interests’, NativeTitle, viewed 17 February 2019,
<HTTPS://WWW.NATIVETITLE.ORG.AU/LEARN/NATIVE-TITLE-AND-PBCS/NATIVETITLE-RIGHTS-AND-INTERESTS>.
Cromb, N 2017, ‘Native title is not land rights’, SBS, viewed 19 February 2019,
<https://www.sbs.com.au/nitv/article/2017/06/22/native-title-not-land-rights>.
Duke, J 2014, ‘What is the Torrens title? Property investment terms explained’, Property observer,
viewed 17 February 2019, <https://www.propertyobserver.com.au/financing/tax-and-legal/29617what-is-torrens-title-property-investment-terms-explained.html>.
Engström, A & Hallnor, F 2017, ’Registerföringen av rennäringens utökade rättigheter’, Högskolan
Väst, viewed 18 February 2019,
< http://www.diva-portal.org/smash/get/diva2:1120525/FULLTEXT01.pdf>.
Griggs, L 2016, ‘The Doctrinal Coherence of the Torrens System of Land Registration in Australia:
Evolution or Revolution?’, viewed 19 February 2019,
<https://pure.bond.edu.au/ws/portalfiles/portal/17512508/the_Doctrinal_Coherence_of_the_Torrens_S
ystem_of_Land_Registration_in_Australia.pdf>.
Hamilton, J 2013, ‘Introducing Conditional Immediate Indefeasibility: Section 170(1) of the
Land Titles Act’ ABlawg, viewed 18 February 2019,
<HTTPS://ABLAWG.CA/2013/03/13/INTRODUCING-CONDITIONAL-IMMEDIATEINDEFEASIBILITY-SECTION-1701-OF-THE-LAND-TITLES-ACT/>.
Lantmäteriet, 2018, ‘Lantmäteriet-en modern myndighet med anor’, viewed 20 February 2019,
<https://www.lantmateriet.se/contentassets/33eae98fa2eb426fb3dad399845fd134/lantmateriet_enmodern-myndighet-med-anor_.pdf>.
NNTT 2018, ‘About native title claims’, NNTT, viewed 15 February 2019,
<HTTP://WWW.NNTT.GOV.AU/NATIVETITLECLAIMS/PAGES/DEFAULT.ASPX>.
NSW gov, 2018, ‘Native title’, NSW gov, viewed 20 February 2019,
< https://www.industry.nsw.gov.au/lands/what-we-do/our-work/native-title>.
NSWLRS, 2018, ‘Torrens title system’, NSWLRS, viewed 15 February 2019,
<http://www.nswlrs.com.au/land_titles/public_registers/torrens_title_register>.
ICSM, 2018, ‘Systems of ownership and registration’, ICSM, viewed 17 February 2019,
<https://www.icsm.gov.au/education/fundamentals-land-ownership-land-boundaries-andsurveying/land-and-land-ownership/systems>.
Page 11
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